Wall Street loves the companies listed below. So why do our Motley Fool CAPS members disagree? They've bestowed on these companies the lowest one- and two-star ratings, signaling their faith that the associated businesses will underperform the market.
So who's got it right? The professional class of analysts sitting in their paneled offices smoking stogies, or a motley crew of community investors pooling their best thoughts for others to share? We think we know who'll come out ahead. How about you?
|
Stock
|
CAPS Rating
(out of 5)
|
Wall Street Bullish Sentiment
|
| Amazon.com (Nasdaq: AMZN ) |
**
|
89%
|
| Dell (Nasdaq: DELL ) |
**
|
90%
|
| Kohl's (NYSE: KSS ) |
**
|
100%
|
Source: Motley Fool CAPS
Now as much as we love our CAPS community, don't sell these companies short just because they've garnered the lowest ratings. And don't go long just because Wall Street says to either. Investing requires closer diligence on your part, so use these ratings as a launching pad for your own research.
A heavy burden
It's not that investors don't like the business of Amazon.com, they do. The rich offerings, the elegance of its e-commerce platform, the ability to challenge head on behemoths like Wal-Mart and Best Buy (NYSE: BBY ) and win. All of these combine to make a monster company.
What many investors can't seem to get their head around, though, is Amazon's valuation. CAPS member richtea100 "can't get past the high P/E ratio" (it's north of 70) while LWILLS counts as a loyal customer, but just not an investor at any price.
Don't get me wrong-I love Amazon and am a loyal customer. That being said, I can't get past their valuation. I have never downthumbed a company before, but to me it is obvious that this stock is way overvalued.
Of course, Amazon has always enjoyed sky-high valuations and growing earnings could take its ratios out of the nosebleed section. MajorBob04 sees its varied offerings doing just that: "Continuing online retail growth & success, plus cloud music and video streaming means growth for many years."
If waiting 70 years -- or even 50 -- to earn back your investment is too long, add Amazon to your watchlist to see if it offers up a more compelling valuation in the future.
Still a lot of money
Computer maker Dell might have pulled back from its recent highs, but it's also well above its 52-week lows, suggesting the market thinks things are not as dire as they once were. Analysts still see a major slowdown in PC sales this year and next, as the iPad eats away at market share, but Intel (Nasdaq: INTC ) says the analysts are wrong. It believes it has better insight into the computer marketplace than the analysts do, and it is still looking for double-digit sales growth in PCs this year.
The caveat that investors might be noticing is that Intel's claim is for the global PC market. Intel notes that while Dell and Hewlett-Packard (NYSE: HPQ ) might see sales growth slow, the rest of the world is still fairly robust. CAPS members have been critical of Dell's product offerings too. While it was quick to unveil the Streak tablet, no one talks much about it anymore. Of course, the iPad does corner the market of tablet buzz such that even the Xoom from Motorola Mobility gets crowded out, and that was seen as a worthy rival.
Highly rated CAPS All-Star TheMiracleDJR says the stock is just one not worth getting into a lather over: "Negative review on latest tablet. Jeez. They make products that are so lame, even though they're supposed to be cheap, they don't even justify the cheap price."
Add the computer maker to the Fool's free portfolio tracker and keep an eye on whether it will be an investment that just gets tabled.
Mid-tier magic
JC Penney (NYSE: JCP ) is seen as a successful turnaround that has made it through the recession and presents its customers attractive offerings. Analysts expect it to grow its business from here, even if March comps were down a negligible 0.3% and sales were off 4%. It's in a better place to steal share from Kohl's, which saw a 4.9% drop in total sales but witnessed comps plummet 6.5%, and was beaten out even by Macy's.
While analysts are gung ho for Kohl's, CAPS members are more circumspect, with almost 20% of those rating the mid-level department store chain to underperform the broad market averages. Add Kohl's to your watchlist then head over to the Kohl's CAPS page and let us know why you investors should try this one on.
What's wrong with that?
It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.
Sign up today for the completely free service, and tell us which side of the street will be the ultimate winner.
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